When you decide to start investing, one of the first decisions is whether to do it through your traditional bank (where you probably already have your accounts) or through a broker specialized in investing. Both options have advantages and limitations worth comparing.
The main difference: fees
Generally speaking, specialized brokers, especially digital ones with no network of physical branches, tend to offer buying, selling, custody, and currency exchange fees considerably lower than those of a traditional bank, precisely because they have a leaner cost structure and are focused specifically on this service.
The variety of products available
A specialized broker usually gives you access to a wider range of international markets, low-cost index funds, and ETFs from multiple providers, while a traditional bank may limit its offering mainly to its own investment funds, often with higher management fees than the third-party index alternatives available through an independent broker.
Personalized advice: the traditional advantage of banks
A traditional bank, especially in private or preferred banking, can offer personalized advice from an assigned advisor, something most digital brokers don't offer in the same way, limiting themselves to providing the investment platform without direct personal guidance. This advice has value for those who need it, but it also tends to carry an implicit cost reflected in higher fees.
Why the conflict of interest also matters when comparing
It's worth considering that a traditional bank may have incentives to recommend its own investment products, on which it earns management fees, which doesn't always align with the objectively most efficient option for you as an investor. An independent broker, since it doesn't manage its own funds, doesn't have that same direct incentive regarding which specific product you choose.
The familiarity and convenience of operating through your usual bank
For many investors, especially those less familiar with investing, the convenience of managing everything from the same app as their usual bank, without needing to open an account with an additional institution, has practical value that can offset somewhat higher fees, especially for smaller portfolios where the fee difference in absolute terms is smaller.
It doesn't have to be an either-or decision
Nothing stops you from combining both options: keeping your traditional bank for your day-to-day accounts and certain products, while using a specialized broker specifically for your long-term investment portfolio, getting the best of each option depending on your specific needs.
Compare the effect of fees on your final result
Our compound interest calculator lets you project how different net return scenarios, after deducting the fees of each option, affect your accumulated capital over the long term.